The capital expenditure of the union government on infrastructure development for FY25 has been budgeted at about 3.3 times the capex for FY20. But that is not enough, says the 2025 Economic Survey, calling for accelerating private participation in critical infrastructure sectors.
According to the economic survey, India needs a continued step-up of infrastructure investment over the next two decades to sustain a high rate of growth.
“Requirements are aplenty. The public sector efforts cannot fully meet these requirements. There are binding budget constraints to the different tiers of government. Private participation should accelerate in many critical infrastructure sectors in many ways — programme and project planning, financing, construction, maintenance, monetisation and impact assessment,” it said.
Talking about the strategy to step up private participation, the survey said it needs coordinated action of all stakeholders involved — governments at different tiers, financial market players, project management experts and planners, and the private sector.
“Capacities to conceptualise projects, develop sector-specific innovative strategies for execution, and, develop high-expertise areas such as risk and revenue sharing, contract management, conflict resolution and project closure need to improve substantially. The efforts of the Union Government would need to be supplemented with wholehearted acceptance of the need for public-private partnerships in infrastructure across the country,” it further said.
It highlighted that the government has instituted many de-bottlenecking and facilitatory mechanisms like the National Infrastructure Pipeline, National Monetisation Pipeline and PM-Gati Sakti that have made progress.
“Financial market regulators have introduced reforms to encourage private participation. Yet, the uptake of private enterprise is limited in many core sectors,” it added.
“The addition to the rolling stock of railways, port handling capacity and power and transformation capacity improved during FY25 so far on a YoY basis. The addition to the length of highways, roads and railway lines has been modestly lower. On the whole, seen against the background of the constraints that prevailed in Q1FY25, infrastructure build-up in the current year has stayed on course,” it said.
Anurag Gupta, Partner, Deloitte India, says, “The Economic Survey 2025 underscores the government’s emphasis on infrastructure development, with increased capital expenditure for FY25 and plans for expansion in FY26. It is very welcoming to see the focus on boosting private sector involvement through efficient PPP models, to ensure timely project delivery. Initiatives like the National Infrastructure Pipeline and Gati Shakti Master Plan are being scaled up with aim to attract private investment and foster integrated planning. The success of these efforts will rely on collaboration, sector-specific strategies, and effective risk-sharing.”
The survey noted that constraints on new approvals and spending during the general elections, coupled with heavy monsoon in many regions, affected the progress of the infrastructure spending during Q1FY25. However, between July and November 2024, the pace of capex has picked up, it said.